PICKHOLTZ v. RAINBOW TECHNOLOGIES

The opinion of the court was delivered by: Breyer, U.S. District Judge.

MEMORANDUM AND ORDER

This is a lawsuit for infringement of United States Patent No.
4,593,353 (the '353) issued on June 3, 1986. The '353 describes an
apparatus for protecting against the unauthorized use of computer
software. Plaintiff accuses defendants' "keys," also known as "dongles,"
marketed under the brand name "Sentinel," of infringing the '353. Now
before the Court are the parties' cross-motions for summary judgment.

BACKGROUND

The '353 includes two claims. Claim 1 provides in its entirety:

1. A software protection apparatus using first and
second authorization codes and a pseudorandom number,
sald software protection apparatus for use with a
computer, comprising:

pseudorandom number generator device located in the
computer and coupled to said reading means, for
generating a pseudorandom number in response to said
reading means reading said first authorization code
from said external memory device, said first
authorization code being read prior to execution of
said computer software, said pseudorandom number
generator device including a sealed casing, thereby
preventing identification of the pseudorandom number
generator algorithm;

processing means located in the computer and coupled
to said reading means and said pseudorandom number
generator device, for comparing the pseudorandom
number generated by said pseudorandom number
generator device with the second authorization code
read from selected data locations in said external
memory device, said processing means generating an
enable signal in response to a positive comparison
of the pseudorandom number with the second
authorization code for enabling execution of the
computer software stored in said external memory
device.

Claim 2 describes in its entirety: "The software protection apparatus
in claim 1 wherein said external memory device includes a floppy disc."

In connection with the Claims Construction hearing the parties
disputed, among other things, whether "computer" includes peripherals and
other devices connected electronically to and communicating with the
processing units. The Court concluded that "computer" as used in the
claims of the '353 does not include peripherals and construed "computer"
to mean "the CPU and main memory on the CPU's circuit board, which, taken
together, form a part of a dedicated microcomputer system capable of
executing instructions on data, and which exclude connected peripheral
devices." April 2000 Memorandum and Order (hereinafter "Order") at 4-7,
16. The Court likewise construed "located in the computer" —
another disputed phrase — to mean "located in the CPU or main
memory or on the CPU Circuit Board." Order at 10.

Defendants now move for summary judgment on the ground that the accused
devices do not literally infringe the limitation that the device comprise
a "pseudorandom number generator device located in the computer," and
that they also do not infringe under the doctrine of equivalents.
Plaintiff has filed a cross-motion for summary judgment seeking a
determination that the accused products infringe the '353 as a matter of
law.

DISCUSSION

I. STANDARD OF REVIEW FOR SUMMARY JUDGMENT

Summary judgment is appropriate when the "pleadings, depositions,
answers to interrogatories, and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to any
material fact and that the moving party is entitled to judgment as a
matter of law." Fed.R.Civ.P. 56(c). An issue is "genuine" only if there
is sufficient evidence for a reasonable fact finder to find for the
nonmoving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
248-49, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A fact is "material" if
the fact may affect the outcome of the case. See id. at 248, 106 S.Ct.
2505. "In considering a motion for summary judgment, the court may not
weigh the evidence or make credibility determinations, and is required to
draw all inferences in a light most favorable to the nonmoving party."
Freeman v. Arpaio, 125 F.3d 732, 735 (9th Cir. 1997). A principal purpose
of the summary judgment procedure is to identify and dispose of factually
unsupported claims. See Celotex Corp. v. Catrett, 477 U.S. 317, 323-24,
106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

A patentee may show infringement either by showing that an accused
product literally infringes a claim in the patent or that the product
infringes under the doctrine of equivalents. See Southwall Techs., Inc.
v. Cardinal IG Co., 54 F.3d 1570, 1579 (Fed.Cir. 1995) (noting that an
"accused product that does not literally infringe a claim may infringe
under the doctrine of equivalents . . . "). Whether an accused product
infringes is ordinarily an issue of fact for the jury. See id. at 1575
(noting that both literal infringement and infringement under the
doctrine of equivalents are factual issues).

A. Literal Infringement

To determine whether an accused device literally infringes a patent
right, the Court must perform a two-step analysis: first it must construe
the claims to determine their meaning and scope, and second, it must
compare the claims as construed to the accused device. See id. ("In the
second step, the trier of fact determines whether the claims as thus
construed read on the accused product."). The Court completed the first
step in its Claims Construction Order, and now must compare the claims as
interpreted to defendants' dongles. To establish literal infringement,
"every limitation set forth in a claim must be found in an accused
product, exactly." Id.; see also Mas-Hamilton Group v. LaGard, Inc.,
156 F.3d 1206, 1211 (Fed.Cir. 1998) ("If even one limitation is missing
or not met as claimed, there is no literal infringement").

Defendants contend that its products do not infringe as a matter of law
because they do not include a "pseudorandom number generator device
located in the computer," a limitation of the '353. A "pseudorandom
number generator" ("PRN") is hardware that generates, in a deterministic
fashion, a sequence of numbers that appear to be random. Order at 16.
Assuming defendants' dongles include a PRN, they nonetheless contend that
their devices do not infringe because the dongles (and thus the PRN) are
indisputably not "located in the computer" as is required by the '353.

The Court agrees. Defendants' devices are attached to input/output
ports which in turn are attached to a computer, just like a printer,
monitor or other peripheral. Thus, to the extent defendants' dongles each
contain a PEN, that PEN is not "located in the computer," as the Court
has construed that term. Rather, the dongles, and thus the PEN in the
dongles, are electronically connected to the computer, that is,
electronically connected to the "the CPU and main memory on the CPU's
circuit board, which, taken together, form a part of a dedicated
microcomputer system capable of executing instructions on data."

In sum, defendants' dongles, which attach to a computer through
input/output channels, are not "located in the computer" as a matter of
law. Accordingly, defendants' motion for summary judgment of literal
non-infringement must be granted and plaintiff's cross-motion must be
denied.

III. THE DOCTRINE OF EQUIVALENTS

Defendants have also moved for summary judgment that their products do
not infringe under the doctrine of equivalents. Under that doctrine, a
product that does not literally infringe a patent claim may still infringe
if each and every limitation of the claim is literally or equivalently
present in the accused device. See Warner-Jenkinson Co. v. Hilton Davis
Chem. Co., 520 U.S. 17, 40, 117 S.Ct. 1040, 137 L.Ed.2d 146 (1997) ("In
our view, the particular linguistic framework used is less important than
whether the test is probative of the essential inquiry: Does the accused
product or process contain elements identical or equivalent to each
claimed element of the patented invention?").

Whether an element of an accused product (or the product itself in its
entirety) infringes under the doctrine of equivalents depends in part on
whether that component (and the device overall) performs substantially
the same function as the claimed limitation in substantially the same way
to achieve substantially the same result. See Ethicon Endo-Surgery, Inc.
v. United States Surgical Corp., 149 F.3d 1309, 1315 (Fed.Cir. 1998);
Penuwalt Corp. v. Durand-Wayland, Inc., 833 F.2d 931, 934-35 (Fed.Cir.
1987) (en banc) ("Under the doctrine of equivalents, infringement may be
found (but not necessarily) if an accused device performs substantially
the same overall function or work, in substantially the same way, to
obtain substantially the same overall result as the claimed
invention."), cert. denied, 485 U.S. 961, 108 S.Ct. 1226, 99 L.Ed.2d 426
(1988). If the differences between a claim and an accused device are
"insubstantial" to one with ordinary skill in the art, the product
may infringe under the doctrine of equivalents. See Ethicon, 149 F.3d at
1315; Sage Prods., Inc. v. Devon Indus., Inc., 126 F.3d 1420, 1423
(Fed.Cir. 1997). The doctrine prevents an accused infringer from avoiding
infringement by changing minor details of a claimed invention while
retaining its essential functionality. See id. at 1424.

As with literal infringement, infringement under the doctrine of
equivalents is a question of fact for the jury, so summary judgment is
only appropriate where no reasonable jury could determine that two
elements are equivalent. See Sage, 126 F.3d at 1424-26. Also, defendants
need only show that the accused devices do not contain one of the
limitations in the '353 patent; if the dongles lack an equivalent to the
'353's limitation that the PRN device be located in the computer,
defendants' devices do not infringe.

Defendants contend that no reasonable jury could find that its devices
contain the equivalent to a "PRN device located in the computer." They
also argue that plaintiff is barred from asserting infringement under the
doctrine of equivalents based on prosecution history estoppel and the
Federal Circuit's recent opinion in Festo Corp. v. Shoketsu Kinzoku Kogyo
Kabushiki Co., Ltd., 234 F.3d 558 (Fed.Cir. 2000) (en banc). While Festo
was decided after plaintiff filed his opposition to defendants' motion
for summary judgment and his own cross-motion for summary judgment, he
had an opportunity to address its applicability to his case in his reply
memorandum in support of his cross-motion for summary judgment.

A. The Festo Test

In Festo, the Federal Circuit created a new test for when an amendment
to a patent application bars a patentee from asserting infringement under
the doctrine of equivalents for the amended claim limitations. Festo
establishes a four-part inquiry. Id. at 570. First, a district court must
determine which claim limitations are alleged to be met by equivalents.
Id. Second, the court must ascertain whether those limitations were
amended during prosecution of the patent. If some of the relevant
limitations were not amended, the patentee may assert infringement under
the doctrine of equivalents for those unaltered limitations. Id.

Third, for the claim limitations that were amended, the court must
consider whether the amendments "narrowed the literal scope of the
claim." Id. If an amendment did not narrow the literal scope of a
limitation, the patentee may still assert infringement under the doctrine
of equivalents for that limitation. Fourth, if an amendment did narrow
the literal scope of a claim, then the patentee bears the burden of
establishing — through the prosecution history itself and not
through extrinsic evidence — that the amendment was unrelated to
one of the statutory requirements for patentability. Id. at 564, 570. If
the patentee can demonstrate that the amendment was unrelated to
patentability, the amendment does not create prosecution history estoppel
and the patentee may still assert infringement under the doctrine of
equivalents. Id. at 586. However, if the amendment was related to
patentability or the patentee is unable to explain the reason for the
amendment by citing the prosecution history alone, then amendment-based
estoppel applies and application of the doctrine of equivalents is
completely barred. As a result, no range of equivalents is available for
the amended claim limitation, and the patentee can only establish
infringement if the literal terms of the limitation read on the accused
device. Id. at 570.

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